City-backed metals firm may cease operations

Just over two years after Amarillo pledged $4.75 million in incentives on top of a $400,000 state grant to lure Zarges Aluminum Systems to the city, the wind company appears ready to blow town.

City officials expected to learn more Tuesday about the company’s possible closing. Mayor Paul Harpole and Amarillo City Commissioner Jim Simms said they received an email Monday from City Manager Jarrett Atkinson about the Amarillo Economic Development Corp.’s plan to issue a news release “regarding Zarges closing its operations in Amarillo.”

Simms said Atkinson’s email doesn’t specifically confirm Zarges will close. Simms said he does not know the details of the release.

Based in Germany, Zarges builds metal components such as ladders and lifts that go inside wind turbine towers.

The news release is expected after the AEDC board of directors meeting at 11 a.m. Tuesday at the corporation’s office on South Fillmore Street.

“It’s never good to lose a business,” Simms said. “However, it’s going to happen, especially in a field that’s related to wind energy, that kind of blows in the wind — the political winds, regarding subsidies and (government) support.”

The U.S. wind energy industry has been slowing as a Dec. 31 deadline approaches to renew a tax incentive to build more wind farms.

The local development corporation built an 80,000-square-foot building for Zarges on eight acres south of the Ben E. Keith facility on North Lakeside Drive in the city-owned CenterPoint Business Park.

Zarges has put money into the facility, Simms said.

“So, we’re going to get a building that’s been improved back. We’re going to get a better asset than what we had to start with,” Simms said.

The economic development agreement calls for Zarges to lease the plant for 20 years, with payments based on job creation. Zarges then would have the option to buy the building for $1.

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We're not going to get a "building that’s been improved ", we're getting stuck with an 80,000 sq. ft. vacant structure that may or may not require further modification, if they can find a tenant for it by offering more "incentives''. If creating or expanding a business makes economic sense and the company is financially sound, it can borrow any funds it needs at historically low commercial rates. AEDC money is never going to make a shaky deal a good one, but it can make a good deal a bonanza for the owners. The money could be put to better use, like building a hotel, garage and ballpark to "save" downtown. Ooops, we're already paying for that stuff. Well, let's pay for streetlights and landscaping, then. Oh wait- we already do. Oh well...

James Madison, "Father of the Constitution" and chief author (1794): ""I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents."

It's not really surprising that the "experimental energy sources" (wind, solar, geothermal, etc) are not showing any progress toward profitability and dependability. It's obvious that even here in the panhandle, with the highest average wind speeds in the country, wind is not reliable enough to sustain a large megawatt capacity generating system, especially since there are few transmission lines capable of taking the electrical power produced by the dispersed power sources to be distributed to our statewide grid.

Same with solar. The sun only shines about half the time on the average, and the solar cells don't produce electrical power when the sun isn't shining.

And that includes the support companies for those industries. If the wind turbine manufacturers are losing business because their subsidies no longer make them profitable, they can't buy products from suppliers, and they go by the wayside also.

It`s kinda like renting a house to someone, if it`s not theirs, they don`t really care about the upkeep! Anything you don`t have to work for is not appreciated. I could go on with these adages,but I`m just wasting my breathe.

“So, we’re going to get a building that’s been improved back. We’re going to get a better asset than what we had to start with,” Simms said.

More questions need to be asked about this matter to ensure there is some level of accountability. As a tax payer supported entity, the AEDC must respond and hopefully the AGN will not accept their dodging. True, these things happen in business...but let's at least be honest and stop the BS- what we, the taxpayers, are getting back is a vacant industrial building (like there is any shortage of those) that has been customized and built to this company's specs. Two years worth of rent paid by the company won't make a dent in paying the taxpayers back for the actual cost of the building so this is hardly a good thing. Just what Amarillo needs...another vacant building that the tax payers get to pay for.

How's that for accountability? The AEDC drops over $5 million on this company, and ole' Buzz David is unavailable for comment. ISN'T THAT HIS JOB?!?

I wish the AGN would do another one of their "investigative" reports showing how much the AEDC has forked out over the years and what happened with those businesses. This isn't the first one that has stuck it to Amarillo taxpayers. It seems the AEDC hasn't learned its lesson.

So Amarillo will get a building back. Loopnet, a listing service for commercial properties, shows only one Amarillo listing for an industrial building over 15,000 square feet. Recent sales for industrial properties are WAY below costs to build. For lease are several, but only three above 15,000 sf. This building will be vacant for years, IMO.
So, AEDC is stuck with an improvement they will have to sell at a loss or lease with favorable terms to another manufacturer, probably one with a tax abatement tied to it. Now, jobs are VERY important to sustaining or growing a community so I am in favor of tax abatement deals. I am a property tax professional, and can tell you that very few abatements fail. This one abated all tax from the entities save for the school. Schools may not abate. Good news is the abated tax will be returned to the entities by Zarges.
So this deal hinged on tax credits for the wind turbines, tax abatements for the supplier and low rent with an option to buy the building for a buck.
Who paid for this? We the people.
Hey, with all the cheap natural gas, why don't they abate a gas fueled power plant? Proven effectiveness and a reliable feed stock. But, not sexy enough for the green energy folks. The only way alternative energy will ever work is if We The People use much less energy. Folks living off the grid don't watch CNN, run air conditioners nor keep the pc's burning like we do.
So, build nuclear, gas powered and keep alternative where it belongs. Off the grid.
The above is my opinion based on my experience and should not reflect anything more than an attempt at common sense in an age of irrational thought, hope and change. I hope we change administrations.
Scott

Not only are we getting sucked into the turbine of the windmill so are some of these companies!
They have known for some time now that without the continued subsidy from the US Govt. aka. our tax dollars, they would not make it.....
I hope we don't renew this tax incentive subsidy in December !! That would be smart energy!

Sims reasoning is what makes bad decisions even sound worse. This is a rationa-lie that has gotten us into fiscal irresponsibility we face from all forms of government from Washington down to our own back yard!